From an employment law per­specti­ve, an employer’s pos­si­bi­li­ty to pro­tect its most va­lu­ab­le as­sets – tra­de secrets – is of­ten of ut­ter­most im­por­tan­ce. The incre­a­sed di­gi­ta­li­za­tion wit­hin to­day’s wor­king li­fe of­fers a va­ri­e­ty of be­ne­fits for know­led­ge-dri­ven ent­re­pre­neurs­hip, but has al­so brought new chal­leng­es for employers when try­ing to keep in­for­ma­tion and com­pe­ti­ti­ve ad­van­tage sec­ret. Today, highly va­lu­ab­le tra­de secrets can ea­sily be down­lo­a­ded and spre­ad by employe­es and ot­hers, po­ten­ti­al­ly cau­sing gre­at da­mage for an employer’s bu­si­ness.

A go­vern­ment bill (prop. 2017/18:200, En ny lag om fö­re­tags­hem­lig­he­ter) has most re­cent­ly be­en pre­sen­ted by the Swedish go­vern­ment, in which a new act on tra­de secrets is pro­po­sed. The act is sug­ges­ted to re­pla­ce the cur­rent Act (1990:409) on the pro­tec­tion of tra­de secrets (Swe. la­gen (1990:409) om skydd för fö­re­tags­hem­lig­he­ter), in the following re­fer­red to as the “PTS”. The new act, in the following re­fer­red to as the “Suggested New PTS”, is pro­po­sed to en­ter in­to for­ce on 1 July 2018.

The Suggested New PTS aims at im­ple­men­ting the EU Directive 2016/943 on the pro­tec­tion of un­di­sclo­sed know-how and bu­si­ness in­for­ma­tion (tra­de secrets) against their un­law­ful ac­qui­si­tion, use and di­sclo­su­re. The EU Directive was ad­op­ted on 8 June 2016, with the pri­ma­ry pur­po­se to har­mo­ni­se the dif­fe­rent EU mem­ber sta­tes’ pro­tec­tion in ci­vil law against un­law­ful ac­qui­si­tion, use and di­sclo­su­re of tra­de secrets.

The cur­rent PTS con­tains pro­vi­sions about re­spon­si­bi­li­ty and san­c­tions for unaut­ho­ri­zed ac­qui­si­tion, use or di­sclo­su­re of tra­de secrets. Trade secrets, de­fi­ned wi­dely wit­hin the PTS, in­clu­de in­for­ma­tion con­cer­ning the bu­si­ness or in­dust­ri­al re­la­tions of a per­son con­ducting bu­si­ness or in­dust­ri­al ac­ti­vi­ti­es; in­for­ma­tion which is con­ce­a­led by such per­son and in re­la­tion to which di­sclo­su­re is in­ten­ded to re­sult in a com­pe­ti­ti­ve di­sad­van­tage.

The Suggested New PTS in out­li­ne

To a lar­ge ex­tent, the pro­vi­sions in the cur­rent PTS re­spond to the requi­re­ments of the EU directi­ve. Consequently, the es­sence of the PTS will re­main un­chang­ed wit­hin the Suggested New PTS. Nevertheless, the go­vern­ment bill sug­gests a num­ber of al­te­ra­tions and sup­ple­ments, which to­get­her forms the Suggested New PTS.

The es­sence of a “tra­de sec­ret”

A new le­gal de­fi­ni­tion of the no­tion “tra­de sec­ret” is pro­po­sed to be in­clu­ded in the Suggested New PTS, cla­ri­fy­ing the ne­ces­sa­ry com­po­nents of a tra­de sec­ret. To a lar­ge ex­tent, the le­gal de­fi­ni­tion is in­ten­ded to elu­ci­da­te the pre­va­lent me­a­ning of the no­tion tra­de sec­ret. A no­vel­ty is that re­se­arch in­sti­tu­tions are ex­pli­cit­ly men­tio­ned as po­ten­ti­al hol­ders of tra­de secrets. It is al­so ex­pli­cit­ly decla­red that employe­es’ per­so­nal ex­pe­ri­ence and skills falls out­si­de the sco­pe of the Suggested New PTS, which en­tails that such per­so­nal ex­pe­ri­ence and skills can ne­ver be re­gar­ded as a tra­de sec­ret.

Infringements of tra­de secrets wit­hin one jo­int pro­vi­sion

The Suggested New PTS pro­po­ses that the term “in­fringe­ment of tra­de secrets” is cla­ri­fi­ed in one jo­int pro­vi­sion and that the sco­pe for va­ri­ous forms of in­fringe­ments is ex­ten­ded. The pro­po­sal en­tails that ad­di­tio­nal in­fringe­ments will be de­e­med unaut­ho­ri­zed, in­ter alia by in­clu­ding im­port, ex­port and sto­rage of in­fringing goods with the pur­po­se of ex­plo­i­ting the­se.

An in­fringe­ment of tra­de secrets should not requi­re in­tent or neg­li­gence by the of­fen­der. It will ins­te­ad be suf­fi­ci­ent that the in­fringe­ment ha­ve oc­cur­red wit­hout the right­ful hol­der’s con­sent. It should ne­vert­he­less, as un­der the cur­rent PTS, be sta­ted that pro­tec­tion un­der the Suggested New PTS on­ly ap­pli­es in re­la­tion to unaut­ho­ri­zed in­fringe­ments.

Damages

The pro­vi­sions re­gar­ding da­ma­ges in ca­ses of unaut­ho­ri­zed in­fringe­ments of tra­de secrets are pro­po­sed to be ex­ten­ded wit­hin the Suggested New PTS. New pro­vi­sions on li­a­bi­li­ty for da­ma­ges for anyo­ne who neg­li­gent­ly ac­quires a tra­de sec­ret as well as for anyo­ne who ma­kes use of a tra­de sec­ret that a par­ty or a par­ty’s re­pre­sen­ta­ti­ve has be­en gi­ven ac­cess to due to a court de­ci­sion are pro­po­sed.

Confidentiality du­ring court pro­cee­dings

A new and im­por­tant ad­di­tion in the Suggested New PTS con­cerns the pro­tec­tion of tra­de secrets du­ring and af­ter court pro­cee­dings ac­cor­ding to the act. Confidentiality is pro­po­sed to ap­p­ly wit­hout li­mi­ta­tion in ti­me, alt­hough not af­ter it has be­en fi­nal­ly de­ci­ded that the in­for­ma­tion in ques­tion do­es not con­sti­tu­te a tra­de sec­ret.

Measures against at­tacks – Publication of ju­di­ci­al de­ci­sions

The Suggested New PTS pro­po­ses that a court shall be per­mitted to de­ci­de that a per­son who has com­mitted or par­ti­ci­pa­ted in an in­fringe­ment of tra­de secrets shall pay for the ap­pro­pri­a­te me­a­su­res to dis­se­mi­na­te in­for­ma­tion about the judg­ment, if de­e­med re­a­so­nab­le. This shall al­so ap­p­ly in ca­ses re­gar­ding im­pen­ding in­fringe­ments.

Penal pro­vi­sions

The mi­ni­mum pe­nal­ty for gra­ve ca­ses of in­dust­ri­al espi­o­nage is pro­po­sed to be incre­a­sed to six mont­hs’ im­pri­son­ment.

Reflections from an employment law per­specti­ve

Employees are of­ten pro­vi­ded with va­ri­ous in­for­ma­tion re­gar­ding the employer’s bu­si­ness; in­for­ma­tion which they ha­ve be­en per­mitted ac­cess to wit­hin their re­specti­ve employment. This en­tails that ac­tions by employe­es sel­dom will be de­fi­ned as in­dust­ri­al espi­o­nage.

If an employee unaut­ho­ri­zed uti­li­zes or di­sclo­ses the employer’s tra­de secrets, the employee could be li­ab­le to com­pen­sa­te the employer for the da­mage in­cur­red. If the employment re­la­tions­hip has be­en ter­mi­na­ted, a for­mer employee can nonet­he­less on­ly be li­ab­le to pay da­ma­ges to the employer in a ca­se of ex­tra­or­di­na­ry re­a­sons.

In ma­ny ca­ses, an employer’s tra­de secrets al­so ea­sily be­come part of the employe­es’ per­so­nal ex­pe­ri­ence and skills; know­led­ge which is not pro­tec­ted un­der sta­tu­to­ry pro­vi­sions on pro­tec­tion of tra­de secrets.

If ac­cess to va­ri­ous ty­pes of in­for­ma­tion is al­lo­wed from the employer’s si­de, it is of­ten dif­ficult to pro­tect the in­for­ma­tion by me­ans of sta­tu­to­ry pro­vi­sions. In or­der to as­su­re that tra­de secrets can be suf­fi­ci­ent­ly pro­tec­ted, ot­her me­a­su­res are of­ten requi­red.

Such me­a­su­re could, in­ter alia, in­vol­ve the following;

Informing and educa­ting employe­es about tra­de secrets, in or­der to pre­vent tra­de secrets from be­ing re­ve­a­led becau­se of ig­no­ran­ce.

Supplementary agre­e­ments between an employer and an employee re­gar­ding con­fi­den­ti­a­li­ty and – for cer­tain ca­te­go­ri­es of employe­es – non-com­pe­ti­tion, can al­so be va­lu­ab­le tools for an employer in or­der to bet­ter pro­tect its bu­si­ness and com­pe­ti­ti­ve ed­ge.